Parochialism

An obstacle for managers in global business world. Monolingualism should be abolished.

Managers who follow ours is better then theirs;its

difficult for them to compete with other managers.

JAPANESE

AMERICANS

ETHNOCENTRIC

GEOCENTRIC

POLYCENTRIC

ETHNOCENTRIC

POLYCENTRIC

GEOCENTRIC

An award winner- American marketing.

EAT YOUR FINGERS OFF

PEPSI BRINGS YOU BACK TO LIFE

Understanding the global environment

Managers of all type of organization faced with opportunities and challenges of Managing in

a global environment. In modern time global trade is being shaped by two forces : regional trading alliance. World Trade Organization.

Regional trading alliance

Few years ago global competition meant

country against country. Such as France versus Germany and America and Japan. Regional trading agreements reshaped global competition which mainly involves : European union (EU) North American free trade agreements (NAFTA) Association of southeast Asian nation(ASEAN)

Map Of European Union

The European union

In 1992 formation of European union which include

12 members. In 1995 three other country joined the group Austria, Finland, and Sweden. In 2004 EU added 10 new members. In 2007 there is two other countries joined thus the union include 27 member. The main aim of nation to reassert their economic position against the united states and Japan.

North American free agreement

NAFTA came into existence in1992 between the Mexico, Canada and U.S.A .

The main aim eliminating the barriers to free trade has resulted to strengthening the economic power.
Now 34 countries in the Caribbean region, south America are negotiating a free trade of Americas agreement.

Association of southeast Asian nation

It is one of the fastest growing economic regions of the world.

The World Trade Organization

The WTO was formed in 1995.It has evolved from general agreement on Tariffs and Trade (GATT) It deal with the rules of trade among nations and the total number of members are- 146

The function of WTO is help businesses (import and Export)their business. It play an important role in monitoring and promoting global trade

Different Type of Global Organizations

1.Multinational Company (MNC)

This type of Organization has operation in multiple country but managed from home country.

Characteristic of Ethnocentric attitude

Example:Sony , Deutsche Bank AG ,Merrill Lynch etc.

2.Transnational Corporation (TNC)

Operational in more than one country but decentralizes management to local country.

Polycentric Attitude

Nestle , Frito -lay etc.

3.Borderless Organization

A firm that has eliminated structural divisions that impose artificial geographic barriers and is organized along business lines.

Geocentric Attitude

IBM , Telefonica etc

How Organizations Go Global

Why Globalization

Reduce dependence on home market

Build more brand and shareholder value Add revenue sources and growth markets Award more franchises in the home country by being global.

How Organizations Go Global

STAGE 1

STAGE 2

STAGE 3

Directly or Indirectly exporting to or importing from foreign countries

Foreign Subsidiary Hiring foreign representation Or Contracting with foreign manufactures Joint Venture Strategic Alliance Licensing/ Franchising

Economic Systems
Free market economy: production of goods and services is in private ownership. Command economy: decisions on what to produce, how much, done by the government.

Mixed economy: certain economic sectors controlled by private business, others are government controlled.

Production is dictated by supply and demand.

Most command economies are moving away from the command economy.

The Economic Environment

Economic Systems
Market economy An economy in which resources are primarily owned and controlled by the private sector. Command economy An economy in which all economic decisions are planned by a central government.

Monetary and Financial Factors

Currency exchange rates Inflation rates Diverse tax policies

The Cultural Environment

National Culture
Is the values and attitudes shared by

individuals from a specific country that shape their behavior and their beliefs about what is important.
May have more influence on an organization

than the organization culture.

What Are Americans Like

Americans are very informal.

Americans are direct.

Americans are competitive. Americans are achievers. Americans are independent and individualistic. Americans are questioners.

Americans value punctuality.

Americans value cleanliness.

HOFSTEDES FRAMEWORK FOR Dimensions of National culture ASSESSING CULTURES

INTRODUCTION Dutch Psychologist named Dr Geert Hofstede INDIVIDUALISMfor IBM Worked POWER UNCERTAINTY QUANTITY VERSUS VERSUS DISTANCE AVOIDANCE QUALITY OF LIFE COLLECTIVISM Undertook research survey from 1967-1973 Data collected and analyzed from more than 100,000 people in more than 50 countries He scored each country using a scale of roughly 0 LONG TERM AND SHORT TERM to 100 for each dimension ORIENTATIONS

INDIVIDUALISM VERSUS COLLECTIVISM

INDIVIDUALISM
PEOPLE PEFER TO ACT AS INDIVIDUALS
LOOK AFTER THEIR OWN INTERESTS AND

THOSE OF THEIR IMMEDIATE FAMILY

COLLECTIVISM A social framework in which people prefer to act as members of a group and protect other members of the group personal needs are less important than the group's needs. This dimension influences the role government is expected to play in markets

POWER DISTANCE

A measure of the extent to which a society accepts the fact that power in institutions and organizations is distributed unequally. in power in organizations.

A high power distance society accepts wide differences

Employees show a great deal of respect for those in

authority. Titles, rank, and status carry a lot of weight.

In contrast, a low power distance society plays down

inequalities as much as possible

Superiors still have authority, but employees are not

afraid off or in awe of the boss

UNCERTAINTY AVOIDANCE
A low uncertainty culture allows individuals to cope better with risk and innovation.

They're also relatively tolerant of behavior and opinions that differ from their own because they don't feel threatened by them. On the other hand, people in a society that's high in uncertainty avoidance feel threatened by uncertainty and ambiguity and experience high levels of anxiety, which manifests itself in nervousness, high stress, and aggressiveness.

QUANTITY VERSUS QUALITY OF LIFE

Quantity of life-degree to which values such as

assertiveness, the acquisition of money and material goods, and competition prevails.
Quality of life is a national cultural attribute that emphasizes relationships and concerns for others Again like Individualism and collectivism.

LONG TERM AND SHORT TERM ORIENTATIONS

It looks at countrys orientation towards life and

work. People in long term orientation culture looks to the future and value thrift and persistence. A short term orientation values the past and present and emphasizes respect for tradition and fulfilling social obligations.

 The

GLOBE (Global Leadership & Organizational Behavior Effectiveness) is a multi-phase, multi-method research project in which investigators around the world examine the inter-relationships between societal culture, organizational culture & organizational leadership. The idea was conceived by Robert J. House in 1991 but the project fomally began in 1993.

1)

Assertiveness

2)

Future orientation

3)

Gender differentiation

4)

Uncertainty avoidance

5) Power

distance

6)

Individualism/ collectivism

7) In-group

collectivism

8) Performance

orientation

9)

Humane orientation

 arguing

against GLOBALIZATION is like arguing against THE LAW OF GRAVITY- Kofi Annan
Doing business globally today isnt easy.
Managers face serious challenges like: 1) Increased threat of terrorism 2) Economic interdependence of trading countries

3) Loss of investments in unstable countries

4) Americanization

Successfully managing in todays global environment will require incredible sensitivity & understanding. Managers need to be aware of how their decisions & actions will be viewed, not only by those who agree, but especially, by those who disagree. Theyll need to adjust their leadership styles & management approaches according to these diversities.

What is Global Perspective? How do organizations do business globally? Short notes (choose any two): 1) WTO 2) NAFTA 3) ASEAN MCQs : 1) Monolingualism is one of the key indicators of parochialism prevalence in a culture: a) true b) false 2) Which one of the following regional alliances was formed after the signing of the Masstricht Treaty? a) European Union b) ASEAN c) NAFTA 3) According to the GLOBE which country/countries rank the highest in Uncertainty Avoidance? a) Sweden b) Greece c) Kuwait d) Mexico 4) National culture is more influential than an organizational culture- is justified by: a) Legal-political environment b) Social environment c) Cultural environment d) Economic environment